NDX breaks back below 50-day moving average
Nasdaq 100 Index (NDX) Technical Analysis Report for Oct 28, 2020 | by Techniquant Editorial Team
NDX finished Wednesday at 11142.76 tanking $456.19 (-3.93%). This is the biggest single-day loss in over a month. Today's close at 11142.76 marks the lowest recorded closing price since September 24th. The bears were in full control today, moving the market lower throughout the whole session. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (NDX as at Oct 28, 2020):
Wednesday's trading range has been $290.00 (2.54%), that's far above the last trading month's daily average range of $202.53. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for NDX.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
The index closed back below the 50-day moving average at 11531.14.
Crossing below the lower Bollinger Band for the first time since March 16th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 11645.29 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on March 16th, NDX actually gained 6.46% on the following trading day.
Although still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Nasdaq 100. Out of 116 times, NDX closed higher 63.79% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 63.79% with an average market move of 1.85%.
With six out of the other six Major World Indices closing lower today, the ones that stand out on the negative side are DAX losing -4.17% and SPX closing -3.53% lower. None of the markets managed to end the day in the green. Read more